Retirement Blog

Why Social Security isn’t fixed

That we have a Social Security problem is not in dispute. The 2013 report of the Social Security Board of Trustees projects that the Social Security Trust Fund will be exhausted in 2033 -- 19 years. After that payroll taxes revenue will be sufficient to pay only three-quarters of scheduled benefits through the year 2087.

Fixing the problem isn't rocket science, and it would reassure millions of future recipients that their retirement planning is secure. So why don't we just bite the bullet, fix Social Security now and get it over with?

Over the last five years, the Institute for Women's Policy Research has been looking at issues surrounding Social Security and talking to politicians and policy experts about fixing its problems. Recently, it released a report on the findings. Heidi Hartmann, president of the institute, says most people in positions to do something about Social Security agree on what needs to be fixed, but disagree on how to pay for it.

"Republicans say we should pay for it by reducing the benefits for those with higher incomes. Democrats have introduced several bills that say we're going to pay for Social Security by raising the tax on people with higher incomes," Hartmann says.

Institute researchers say policy makers and politicians are factoring the following issues into any potential plan to fix Social Security.

Mixing Social Security with the debt problem. Democrats told interviewers that the driving issue now is the national debt. Introducing Social Security reform into this discussion would muddle both issues. Delaying the discussion five years might distance it from the debt crisis, plus more boomers will be collecting at that point, making the need for fixing the shortfall more immediate.

Higher benefits for lower earners. Many people think that there ought to be longevity payments -- a bump in benefits for those who live beyond a certain age. Others would revise the cost of living formula to reflect the cost of health care and other things on which older people spend the most. Still others suggest eliminating the part of the calculation that gives credit for 35 years of work, basing benefits on fewer years of work. That change would mostly aid women who take time out from the workforce to care for families. "This is something the women's movement used to talk about a lot in the '70s and '80s," Hartmann says. "But since then there have been fewer homemakers and we haven't talked about this as much."

Improved benefits for single people. A bipartisan majority of those interviewed supported the idea of adding caregiving "work" credits to the Social Security records of men or women taking care of children or elders instead of holding full-time jobs. Other people would eliminate spousal benefits altogether and compensate lower earners with a higher minimum benefit. A few would modify spousal benefits by adding an earnings-sharing plan that combines and averages total earnings for dual-earner couples across the duration of their marriage. This would potentially make it easier to share retirement benefits after divorce.

Restore or add benefits for students. Before 1983, college students were eligible for Social Security benefits if they had a working parent who died or became disabled. Some support restoring that benefit because it would be good for the economy overall.

Put more money into the system. Raising the earnings cap for the payroll tax was viewed by several experts as the simplest way to fix the funding gap. Other ideas included expanding the payroll tax to cover non-wage benefits like tax-free spending accounts and generous health insurance plans sometimes received by higher earners. Many resisted the idea of tapping other types of taxation such as estate taxes because it would make the system seem less self-sufficient.

Cutting benefits. Ways to cut benefits include adopting the chained consumer price index, which reduces cost-of-living increases; indexing the retirement age to future longevity increases, and requiring later retirement. Both Democratic and Republican respondents doubted the wisdom of further increasing the retirement age past 67 because there are "simply not enough employers willing and able to provide jobs to older workers."

In the meantime, Social Security is very complicated, and it is difficult for workers to know what they are entitled to. Social Security is closing offices and pushing recipients to go online to find information just at a time when increasing numbers of people are entering the system. "Social Security does very little to make it clear how your benefits would increase over time based on your choices," Hartmann says. "This was identified as a problem by a substantial minority of those interviewed. They thought people should be helped to understand the system better."

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113 Comments

penny

August 14, 2014 at 12:08 am

Social Security should of been a personal retirement and not lumped together.Why does someone who pays little get to claim on their spouses Social security.That will benefits the wealthy.

William

August 13, 2014 at 1:14 am

Raise the taxes all they want, but with articles coming out that American wages have fallen 25% over the last number of years, they can't tax blood from a stone. If people are earning less, they will be paying less into Social Security. Raising the tax rather than helping will reduce their already reduced take home pay and the employer will have to pay a matching amount, meaning it is very likely some people will lose their jobs.

It might also help to pull the disability programs out of Social Security and make them their own program. As it is, disability payments, however necessary, are a drain on Social Security. Better to make that its own program, but that won't happen because the costs will be more plainly visible and politicians don't want that.

David Wessendorf

August 05, 2014 at 5:09 pm

I paid the maximum into Social Security for many years. In addition, I have added two annuities and a small pension to my retirement package. My wife adds a small 401K, a small IRA, and her social security to the mix. Together, our income for golden years comes to about $50,000.00 per year. We would do ok if it wasn't for having to step in and rescue our middle aged kids. Last month we had to come up with $5,046.19 to prevent one of the kids from losing the home she had paid on for over 20 years. Yeah, a 30 year VA Loan with over $100,000.00 paid on a $40,000.00 home. Both are disabled, and he has had his spine caged in three places. He pulled steel for this company for over 17 years, and now his back is damaged forever. That was two years ago, and they still are dragging out the workman's compensation litigation. Meanwhile, they have zero income! Last month, we had to pay their electric bill, so that they could still cook and wash clothes. I don't think we could survive if they cut our social security.

Matt

August 05, 2014 at 6:32 am

Here's an idea. Stop the fraud. Stop giving beni's to illegals. Stop giving beni's to Juvi's that go to jail/ prison, who probably should of never had benefits to begin with. If you don't pay in, you don't get it.

Barry

August 03, 2014 at 1:37 am

My Comment About Soc.Sec. is this, Instead of throwing Billions & Trillion's of Dollars over seas, to the other people when there not paying us back, is that fair to us!!!?
Lets put it in to the Soc.Sec. pot & build up what people cant afford to live on when there retired Like me & many more to come. per day There for Can you live on $737.00 a mo.?
X that buy 12 that = to, $8844.00 a year now / that back os 12 then / buy 4 wich = per week it's $184.25 then / buy 40 if a person was working 40hrs a week could you live on that & that is only, $4.61 a hr! I & others are liven below poverty level
& now ss Is only going to last till 2033 where did you go to school at!? What the heck is a 1.5 ss rase per year? come on man lets get with the program ok? or are you to dumb to unstand what I stated here for all to read.?

Brent

July 28, 2014 at 2:04 pm

To Michelle, whoever told you that you can not collect both TRS and Social Security is in error. Check with someone else and don't take "no" for an answer.
It is a shame when our elected representatives serve themselves before taking care of the public. Nobody in Congress should receive lifetime pay when they serve for less than 30 years. Also, their medical and dental should be the same as everyone else's. Social Security is having problems because Congress keeps taking these dedicated funds and using them for other purposes. The only justification for continued pay to congressmen after they leave congress would be to take that money and use it to pay down SS instead of paying for a job that is not being done.

John

July 28, 2014 at 3:38 am

Knowing the amount money the federal govt. borrowed over the years from SS to fund welfare. You would think welfare should run out of money before SS. Don't let any, (white, black or other), women say they don't know who their baby's daddies are. Find out and have both of them help with the financial support of their children. Stop the welfare game, (a check per child). It perpetuates laziness and corruption. If the government wants to help this situation, they could start manufacturing businesses and employ these individuals. By working, these individuals should feel like they were contributing members of our society. The goods created could be sold to pay the salaries of these workers. The excess profits could be used to repay SS. There are very few politicians on either side that have ever touched this issue. Why do you think this is?

Krystyn Knights

July 27, 2014 at 12:16 pm

It is indeed sickening the way the government is run. Once in an office, the person gets a whole lifetime of paychecks, medical too! Now that is just plain sick. Why don't they have to pay for their medical and jump on Social Security like the rest of us do. What makes them more important than the rest of us?

michelle

July 25, 2014 at 11:39 pm

I was informed I will not be able to claim my ss after meeting all my quarters and more and have taught school for six years. won't get much from TRS but I would like to claim for benefits.

This I am told is double dipping. How could this possibly be when I earned it?

There are many professions that allow retirement to be collected at the same time. Railraod,military,county,city,private corp .....why can earned retirement be literally stolen?!

dennis123

July 21, 2014 at 2:35 am

Our government employees always to have a lifetime job, not the 2-4 years they are suppose to be there. They just get in their positions and before you know it they are just one of the good old boys who do as they are told and not what they were elected to do. Then they sit back and draw a real healthy pension plan and the hell with there voters. These are not suppose to be lifetime jobs for these guys.

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